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- Discuss any market failures, unintended consequences, or information imperfections affecting the situation in the article.
- Explain how these factors challenge or modify the predictions of the standard equilibrium model.
- Discuss potential unintended consequences, externalities, market power, or reasons the standard market equilibrium model may not be applicable.

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Summarize the positive (descriptive) and normative (value-based) analysis of the policy or situation.

Present a reasoned conclusion on the policy's effectiveness, considering efficiency, equity, winners and losers, etc.

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Every decision we make in life is driven by economics. This article is connected to many economic policies and terms.

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Opportunity cost is the value of the next best alternative when someone makes a decision

The decision in this case is fast food vs cooking. When you pick one, you miss out on certain aspects of the other. The opportunity cost of cooking at home is the time you spend shopping and cooking. You could use this time for other activities. For many people, especially college students, time is very valuable.

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Is Fast Food Cheaper Than Cooking at Home?

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Is Fast Food Cheaper Than Cooking at Home?

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The article, "Is Fast Food Cheaper Than Cooking at Home?" addresses the very real conflict that many Americans face today. The recent article was written by Aja McClanahan to explore the cost and lifestyle considerations that come with both cooking at home and eating out.

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The average American spends $2,500 to $3,639 a year on fast food

Cooking at home can be cheaper when you buy in bulk and eat leftovers.

Fast food usually has higher costs, calories, fat, and sugars.

Cooking at home allows those with dietary restrictions to have more control.

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Externalities are unintended side effects of activities that affect other people. In the article, "Is Fast Food Cheaper Than Cooking at Home?" they talk about the health effects of eating out. This can be a negative externality. Eating out frequently can contribute to higher healthcare costs. Eating out can also contribute to pollution. Lots of restaurants have high rates of pollution due to waste. Eating at home can have a positive effect on your health.

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Price elasticity is a measure of how sensitive a consumer is to certain price changes. The article, "Is Fast Food Cheaper Than Cooking at Home?" prices certain meals like steak to show that dining out can come with a high price markup. This may lead certain consumers to lessen their demand for dining out when the price difference is much higher in comparison to eating at home. With this, cheap fast food offers convenience at low prices, so the consumer's demand for eating out would be higher.

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The article "Is Fast Food Cheaper Than Cooking at Home?" talks directly about shrinkflation. While this isn't something we've talked about in class, it is an economic term. Shrinkflation is when product sizes are reduced because of rising production costs or market competition. Many items at the grocery store, even essentials, have gotten significantly smaller even though the prices are the same or higher. This has made the debate of "fast food vs cooking" even more prominent. Grocery prices are at an all-time high. With the time spent shopping, preparing, and cooking, people are starting to think that eating out is just less costly overall.

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Promote Healthier Eating:

-higher fast food taxes could encourage more affordable, healthier home-cooked meals

Impact:

-increased taxes might disproportionately affect low-income individuals who rely on fast food for convenience

Implement Complementary Measures:

-introduce subsidies for healthy groceries to balance the tax impact and support healthier choices

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What will happen to equilibrium if tax is increased?

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What will happen to equilibrium if tax is increased?

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Equilibrium Shift:

-increasing taxes on fast food would decrease supply, leading to higher prices and lower consumption

-the shift could encourage consumers to opt for home-cooked meals, potentially improving public health but also imposing a higher financial burden on low-income households

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- Present a comparative analysis of the current situation with a past policy or scenario.
- Use real-world examples or expert viewpoints to provide a broader perspective.

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Comparative Analysis - Alaskan Salmon vs. Past Policies

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Comparative Analysis - Alaskan Salmon vs. Past Policies

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Current Situation: Alaskan Salmon Overfishing.

This problem is reducing the Alaskan salmon population due to overfishing (pressures from commercial fishing and tourism).

The policy reacted by giving the salmon population time to reproduce before being harvested. The size and the number of catches you could make were limited and then implemented.

In the past, the Atlantic Cod market collapsed because of overfishing and the lack of regulation in before the 1990s.

The Canadian government, in this instance, reacted by banning in place, but because of earlier harm to the market, recovery has been slow.

The expert opinion on this topic is that overexploitation results from unchecked resource use, much like the cod collapse.

Controlling access through licenses or quotas aids in striking a balance between sustainability and economic activity.

Both policies aim to strike a balance between environmental sustainability and economic viability, much like fast food versus home cooking does in terms of convenience and health.

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https://salish-current.org/2024/10/21/commercial-salmon-fishers-struggle-with-low-prices/

https://money.usnews.com/money/personal-finance/articles/is-fast-food-cheaper-than-cooking-at-home

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Commercial salmon fishers struggle with low prices

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Surplus then shortage, low weights, farm fish, imports, lower demand contribute to tangle of challenges

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Conclusion - Positive and Normative Analysis

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Conclusion - Positive and Normative Analysis

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Positive: Time, money, and convenience are the main factors influencing the fast food policy.

Normative: Although they demand self-control, healthier, home-cooked options are more effective over time.

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Negative Externalities

- There are many negative health risks associated with consuming fast food

- Many fast food consumers participate in overconsumption when it comes to fast-food which can lead to obesity and heart disease

- With more consumers spending more money on fast food each year, this will likely increase the demand for health care services due to more people with a poor diet, which might increase the price for health care

- The articles failed to note the negative externalities impacting the environment with high greenhouse gas emissions and plastic pollution

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The fast food industry is dominated by a few large companies which causes oligopolistic pricing. These firms can set prices at a level above marginal cost, which creates inefficiencies. Also, this type of market power often results in prices that do not reflect the true cost of production (negative externalities). The standard model assumes perfect competition, but the presence of this type of market power can lead to higher prices and lower output compared to the competitive equilibrium.

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Taxing fast food to encourage healthier choices and address negative externalities has mixed effectiveness on these three things.

Efficiency: By raising fast food prices, the

tax aims to reduce consumption, potentially decreasing obesity and healthcare costs. However, the policy’s efficiency is limited since many consumers, particularly those lacking healthier alternatives, may continue to rely on fast food due to convenience.

Equity: The policy disproportionately affects low income individuals who depend on fast food for affordable meals. While it promotes healthier eating, the tax increases financial strain on those who may not have other affordable options. Subsidizing healthy foods could balance this impact, supporting both health and fairness.

Winners and Losers: Public health systems could benefit from reduced long term healthcare demand. However, fast food companies face revenue losses, and low income consumers bear the tax’s cost.